Regular monthly P&I
$4,424.48
Mortgage payment only. No taxes, insurance, HOA dues, or mortgage insurance.
Buydowns Create More Affordability
One of the biggest challenges in today’s real estate market is affordability, and that creates an opportunity for agents who know how to solve for payment. Instead of automatically reducing the sales price, a seller credit can often be used more effectively toward a Temporary or Permanent Rate Buydown. A Temporary Buydown can provide immediate payment relief during the first few years, while a Permanent Buydown can reduce the buyer’s interest rate and monthly payment for the life of the loan. For listing agents, this can help make a property more attractive without giving away unnecessary price. For buyer’s agents, it creates another way to help clients qualify, improve cash flow, and feel more comfortable moving forward. Used correctly, buydowns can be a powerful negotiation tool that helps overcome payment objections and get more transactions to the closing table.
Visual Guide · Presentation
Permanent vs. Temporary Buydowns Guide
Slide 1 of 15
Top Reasons to Use Buydowns
Mortgage Rate Buydowns: FAQ
Limits and eligibility vary by loan program and are subject to change. Talk with a mortgage advisor about your specific situation.
Permanent vs. Temporary Buydown Chart
Seller Concession Cheat Sheet
How much a seller may contribute toward closing costs, based on loan program, property type, and down payment.
| Loan type | Property type | Down payment | Contribution type | Max contribution |
|---|---|---|---|---|
| Conventional | Primary or secondary home | Less than 10% | Closing costs, prepaid items, and discount points | 3% |
| Conventional | Primary or secondary home | 10% to 25% | Closing costs, prepaid items, and discount points | 6% |
| Conventional | Primary or secondary home | More than 25% | Closing costs, prepaid items, and discount points | 9% |
| Conventional | Investment | 15% or more | Closing costs, prepaid items, and discount points | 2% |
| FHA | Primary | 3.5% or more | Closing costs, prepaid items, and discount points | 6% |
| VA | Primary | Not applicable | Closing costs, prepaid items, and discount points | Unlimited, up to 2 discount points |
| VA | Primary | Not applicable | May include debt payoff | 4% |
Reference guide only. Seller contribution limits and eligible costs may vary by program, transaction, and investor requirements. Confirm current guidelines before structuring an offer.
Suggested Contract Verbiage
Permanent Buydown vs Price Reduction
Temporary Buydown vs Price Reduction
Price vs Perm vs Temporary Buydown
Permanent Buydown = More Home
Financing Flyer
Seller Credit Calculator
See a seller credit as a percentage of the loan and the purchase price
Estimates for illustration only. Seller contribution limits vary by loan program, property type, and down payment. Confirm current guidelines before structuring an offer.
Temporary Mortgage Rate Buydown Calculator
Principal and interest only
Loan details
Loan amount and down payment percentage update each other automatically.
Enter up to three decimal places.
First year payment
$3,546.80
Mortgage payment only. No taxes, insurance, HOA dues, or mortgage insurance.
First year monthly savings
$877.68
Total temporary buydown cost
$15,931.59
Cost as % of loan amount
2.276%
Cost as % of purchase price
1.821%
Monthly payment comparison
Lower bars show lower principal and interest payments.Mortgage payment only. No taxes, insurance, HOA dues, or mortgage insurance.
$3,546.80
Year 1 · 4.500%
$3,974.52
Year 2 · 5.500%
$4,424.48
Regular · 6.500%
Payment schedule and estimated cost
2/1 Buydown
| Payment period | Effective rate | Bought down payment | Regular payment | Monthly savings | Months | Period cost |
|---|---|---|---|---|---|---|
| Year 1 | 4.500% | $3,546.80 | $4,424.48 | $877.68 | 12 | $10,532.15 |
| Year 2 | 5.500% | $3,974.52 | $4,424.48 | $449.95 | 12 | $5,399.44 |
| Year 3 and beyond | 6.500% | $4,424.48 | $4,424.48 | $0.00 | 336 | $0.00 |
This calculator is provided for educational and illustrative purposes only. Results are estimates and include principal and interest payments only. A temporary buydown does not change the loan's note rate. The funds used to subsidize the temporarily reduced payments are generally collected at closing. Program availability, contribution limits, qualification requirements, and actual costs may vary. This calculator does not constitute a loan approval, commitment to lend, or interest rate quote.
About Kurt
Real Guidance Behind the Calculators
Calculators can explore possibilities, but they cannot evaluate every guideline, property, credit profile, or financial goal.
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